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Tesla already forcing down battery storage prices in Australia

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The release of the Tesla battery storage concept at the end of April has certainly changed the discourse around battery storage, and caused some to rethink their energy business models. And it appears it is already having an impact on prices in the nascent Australian battery storage market.

Two wholesale pricing announcements have caught the eye in recent weeks. One is the pricing on the 7.2kWh Legato product from AU Optronics that AGL Energy is making available to consumers in Queensland this month.

legato pricing

According to wholesale pricing offers, the 7.2kWh system is being offered at around $A14,000. The significance of this? At around $A2,020/kWh, it is down by more than one-third of the price offered for similar battery storage applications just six months ago. The average pricing last November had been around $A3,200/kWh.

That experience is repeated in the latest pricing news from solar wholesaler and distributor Solar Juice, which is offering a 3.6kWh Samsung battery storage product, with inverters and smart meters, for $AS7,999.

samsungAndrew Burgess, co-founder and director of Solar Juice, says the pricing came down 30 per cent during negotiations, which had lasted six months. “The roadmap is for reduction of 25 per cent per annum moving forward for the short term. Exciting times.”

Hugh Bromley, from research firm Bloomberg New Energy Finance, says Tesla has effectively brought forward the pricing of battery storage by anything from 5 to 7 years.

Asian firms can compete with the proposed Tesla battery storage product on price, it’s just that they will likely have to forgo their planned recouping of R&D expenses in the next few years.

This graph below illustrates how the Tesla pricing has changed the pricing estimates of battery storage. On the left is the Tesla battery system, plus inverter costs and balance of system and installation costs.

Immediately to the right is the result of BNEF’s pre-Tesla price check (in US and Australian dollars), and further to the right is its (pre-Tesla) pricing estimates for the next five-year blocks.

Basically, BNEF says Tesla has effected a price cut of around 50 per cent in $A terms. For the other manufacturers to match that, they will have to sacrifice attempts to get “R&D payback” in the first years of deployment. Like companies associated with Tesla founder Elon Musk companies, be it with Tesla or Solar City, they will have to play the long game and look to get their R&D payback over time via the mass market.

bnef battery costs

The payback period for consumers, illustrated below, is interesting because, although it should be noted that this is based on “pre-Tesla” pricing, it’s also important to note that it is an average, and will depend on other factors such as the size of export tariffs.

Other estimates have pointed to payback period as low as six years in some states, depending on the tariff and battery size. But that accounts for post-Tesla pricing. This graph does underline the point that the bigger the battery storage installed, the longer the payback period, although the difference is virtually obscured by 2030.

BNEF battery payback

This last graph is interesting to note because it puts the Australian market in some global context. While Australia is considered to be one of the key markets in the world, it is not because of its size, but because its growth is likely to be “organic” and not subsidised – although tariff structures will have an influence.

In fact, Australia does not even rate in the top 10 battery storage countries in the world by volume, by 2020, based on this. Mostly this is because other countries have created specific targets and incentives to accelerate the roll-out of battery storage, particularly those with high renewable energy penetrations.

According to BNEF, Australia is likely to have around 104MW of capacity, or 256MWh, of battery storage by 2020. This is expected to be split evenly between behind-the-meter users such as households and businesses, and “end-users” such as network operators.

BNEF world storage install

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  • john

    I so want to comment on this however I have a problem
    please Giles give us Australian prices for back up battery offers
    other than the first one you give which is $14550 for 7.2 KwH.
    Not exactly a very good system
    Please set it out on 2 figures the amount of demand power and total power supply.
    As you very well know there is no use having a backup system that has a demand ability of 2kw if the demand is 4kw so my feelings are we need a backup system that is able to cope with at least 3 to 4 kw of demand and 8 to 12 of Kwh supply

    • Mike Dill

      Yes. When possible, give us KW and KWH.

      • Miles Harding

        And don’t get confused and use the wrong one or we’ll have to apply some neurons to straighten it out! :)

      • Jacob

        We only need the kWh figure.

    • ChrisEcoSouth

      I’ll try to help a bit here: The Samsung can export at 4.6kW continuous, but the battery may only have a max of 2.2kW drawn from it whether 1.exporting or 2.delivering power in island-mode (ie to the house in a power-cut). Eg, if the house happens to have a 4.6kW load, and the array can only deliver 2.4kW, then the other 2.2kW comes from the battery. If the array drops further, then the power will be drawn from the mains to make up the difference.
      The 2.88kWh of the battery will go up and down during daylight to minimise export and import from mains, and of course will discharge in the evening.
      Legato information is scant; at this stage one can only assume the operation is same. But does a 4.5kW array mean it matches a 4.5kW max PV rating of the inverter? If so, then the inverter appears to be a nominal 3kW. The usable kWh capacities are as my post below.

  • juxx0r

    Using the legato prices that gives $1,158 per kWh and $6,203 for balance of system with an R-squared of 0.99998.

    I figure that’s our starting point.

    Using the same BoS number for the Samsung gives $721/kWh a 38% saving.

    Seems like there’s plenty of room for movement to come.

    • Mike Dill

      In the Tesla shareholders meeting yesterday, Elon stated that the Gigafactory will be running by the middle of next year. I expect that the PW will no longer be vaporware by then, and all the remaining players will have products very near the stated PW price.

      NEW From the meeting: “it’s (the PW) actually going to go from having 2 kilowatts steady, 3.3 kilowatts peak to a 7-kilowatt power (peak), 5-kilowatt steady. Price is unchanged.”
      It will be interesting to see the actual performance over time and lifetime based on those discharge curves.

  • ChrisEcoSouth

    These are wholesale prices – installed retail prices are higher. Both the Samsung and Legato are capable of exporting in their own right – ie if used as a retrofit, you would most likely remove your existing grid-inverter.

    Usable capacities would be: 5.76, 3.84 and 1.92kWh for the Legato; and 2.88kWh for the Samsung. All assuming 80% is cyclically discharged (DoD).
    Both units appear to be able to supply appliances directly in a power-cut, but both units have *small* inverters for direct drive of appliances (ie around 2kW), and should be installed such that only the fridge and some lights are connected, to avoid overload and possible damage.

  • Miles Harding

    In a nation of lifters and leaners, we should aim to be the lifters in the RE and sustainability area. I still feel that DIY (professional installed?) offers far better value than these offerings. For $14K, it is reasonable to install a capable off-grid battery and inverter that can easily supply the needs of an average household.

    Today, I priced a 32kwh LiFePO4 battery with 10kW single phase off-grid inverter + AC changeover switch and it came to $24,000 AUD. I have see 9 year old cells of this type in a vehicle battery, so expect them to last at least 10 years in a stationary application. ($750/kwh)

    A viable alternative is lead acid. I was surprised how well this 100 year old technology compares to Li-ion:
    If using Lead acid, more capacity is needed to allow for a low daily depth of discharge to promote a long battery life. Here, I am assuming 40kwh of battery and a 7.5kwh average night discharge, which should see the battery last 10 years. This type of battery will tolerate occasional deep (80%) discharges, provided they only occur a few times per year. Efficiency-wise, lead acid isn’t as good as Li-ion, so some additional PV is required to allow for this, say an extra 10% of PV panels.

    A cost-effective solution is the Trojan T105RE wet cell battery. For a capacity of 40kwh, 30 units would be required at a retail price of $258 ea, or a total battery cost of $7,740, delivered to capital cities. This would make the total 10kW off-grid system cost nearer to $14,000, but a ventilated battery shed is required. Estimated per kwh cost is price nearer to $425, assuming it is de-rated as 32kwh.

    Another 100 year old technology is Nickel-Iron. While expensive ($850 per kwh), it will run for 40+ years! It is not as efficient as big lead acid, but the overall life costs are similar or less. Also, NiFe is *very* tolerant to abuse. It has been possible to restore 85 year old Edison cells (handled by Edison himself?) to a functional state!

    I have a 20kwh Li-ion (LiFePO4) stationary battery installed at home, it is capable of running an average household, but won’t always charge the electric car overnight if the weather has been cloudy :(

    I suggested a 10kw inverter so that toaster+hotplate+kettle+(other loads) doesn’t cause a blackout.

    • ChrisEcoSouth

      DIY only good if you are skilled in electrical/electronics, otherwise safety issues could damage property, or worse, a person.
      Wet cells and NiFe both have dangerous acids and require legislated safety precautions.

      • Geoff

        Chris, NiFe batteries have Potassium Hydroxide, an alkali, as their electrolyte, this eventually degrades into Potassium Carbonate as it slowly absorbs Co2 from the air. It is necessary to replace the electrolyte about every 5-6 years, the batteries have a life expectancy of in excess of 40 years. They can be run flat or overcharged without damage, they seem to be almost bullet proof. To dispose of the electrolyte at the end of its life I dilute it about 10:1 with water and water my garden with it, Potash fertiliser for free!

    • neroden

      Lead-acid has all that nasty lead in it, which has to be recycled very carefully. Nickel-Iron is safer.

  • Jacob

    These systems seem very costly compared to the Powerwall.

    • ChrisEcoSouth

      Powerwall is still effectively ‘vaporware’. The above systems plug into the mains directly – the Powerwall doesn’t. The PW requires an existing grid-inverter, which is partly why it appears cheaper.

      • Jacob

        $10,000 cheaper.

        • ChrisEcoSouth

          And doesn’t come with grid-inverter or ability to run appliances directly. Don’t get me wrong – I think the Legato is most likely way overpriced for what it is, but we are seeing the obfuscation of vaporware at work , here. 😉

      • GCO

        Indeed. And the Powerwall-compatible inverters, let alone their pricing, aren’t available yet either…

        • eject

          actually they are. The Fronius Symo Hybrid series for example is what is going to be available as a official combination.
          Pricing will obviously vary depending on the region and the max power the inverter can do.

          There is also the question if you want the whole PV array coupled to the battery or only a single string. In theory it would be wasteful to use a DC battery capable inverter that delivers more power then you can store in a single cycle. So it might make sense to use normal inverters for lets say have the installation.

          • GCO

            “is going to be available”
            That was my point. Announced ≠ available.

            Also, I doubt that splitting a PV + battery install over multiple inverters will be cheaper, but again, in the case of the Powerwall, we won’t know until those start selling anyway.

          • eject

            I probably phrased it wrong. Altough the Fronius Symo Hybrid series will be what is officially available together with the PW once it comes out these inverters are on the market since at least 2012.

            Here in Germany a lot of solar installs are anyway split on multiple inverters. It is a common technique for spreading failure risk. Achieving the right string voltages. Sizing inverters correctly to PV array size (have a 3kW+5kW might be cheaper then one 10kW especially if you havn’t actually got 10kW on the rooftop, also again protecting against total failure). Managing partial shading ect. is also a big topic.

            If you do it like the installers in the US e.g. SolarCity and you simply install a certain system size not specifically designed to a roof it doesn’t matter much but with the competition that we had in Germany between the installers and people actually investing their own money and not leasing a lot of price tweaking is to be considered. If you have a east/west system for example you might be able to use a single inverter with only half the power then the PV arrays since east and west will peak at different times of day. Also outside of tracking systems it might make sense to choose the inverter size at 70% array size anyway because you will lose only a few hours of 30% extra a year.
            My point is, inverter sizing when economy comes into play is a lot more complex then to just match it with the array size. If you put a battery in the equation it gets more complicated, because you can only charge the battery once a day so there is no point in having a inverter that would have the battery filled up at 11am if it has time to do so until 6pm, e.g..

          • ChrisEcoSouth

            You pretty much described the same variety of installations across Australia! So far, battery systems on offer are fairly flexible, but do require the next level of expertise to integrate/match suitably to the premises, whether they have some or no existing solar.

      • Ronald Brakels

        The Powerwall is definitely not available in Australia and it may be years before we can put our money down and get one without unreasonable delay, so I can see why it can be said to be effectively vapourware since it is not currently available. But just to be clear I’ll point out that it is not actually vapourware which is something that is never available, at least not in the form that was promised. I mention this because there are a few people on the interwebs who don’t just have healthy skepticism about the Powerwall but have crossed into insisting that the very concept is a violation of God’s law. (Oddly enough, they seem to be American. I’m so old I can actually remember when Americans supported their country’s products.)